The 30-year fixed-rate mortgage (FRM) averaged 5.10% this week, a decrease for the second week in a row, according to the Primary Mortgage Market Survey® (PMMS®) released by Freddie Mac Thursday.
Key findings:
- 30-year fixed-rate mortgage averaged 5.10% with an average 0.9 point as of May 26, 2022, down from last week when it averaged 5.25%. A year ago at this time, the 30-year FRM averaged 2.95%.
- 15-year fixed-rate mortgage averaged 4.31% with an average 0.8 point, down from last week when it averaged 4.43%. A year ago at this time, the 15-year FRM averaged 2.27%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.20% with an average 0.3 point, up from last week when it averaged 4.08%. A year ago at this time, the 5-year ARM averaged 2.59%.
What the experts are saying:
“Mortgage rates decreased for the second week in a row due to multiple headwinds that the economy is facing,” said Sam Khater, Freddie Mac’s chief economist. “Despite the recent moderation in rates, the housing market has clearly slowed, and the deceleration is spreading to other segments of the economy, such as consumer spending on durable goods.”
Realtor.com Senior Economic Research Analyst, Joel Berner, commented, “The Freddie Mac fixed rate for a 30-year mortgage fell for the second week in a row from 5.25% to 5.10%, following Tuesday morning’s sharp dip in the 10-year Treasury. Yields quickly fell 14 basis points from the day’s open, and have hovered around 2.75% since. Investors taking part in the stock market sell-off of the past 5 weeks have shifted their attention to the debt market, driving up prices on T-bills and mortgage-backed securities. This allowed mortgage rates to fall, even amid inflation-cooling policies initiated by the Federal Reserve. Despite the retreat of the last two weeks, the 30-year fixed rate is still 215 basis points higher than it was this week last year: 2.95%. In practical terms, a monthly payment on the same $300,000 30-year fixed rate mortgage is $372 more than it would have been at last year’s rate, but anyone shopping in today’s market will note that $300,000 today doesn’t buy what it used to. The cost of financing a home purchased at the median listing price and current mortgage rate today compared to one year ago is $751 higher, a jump of 48% stemming from the combined impact of higher rates and home prices.
“Mortgage rates leveling off is a lifeline for prospective homebuyers already dealing with inflation and record-high listing prices, and welcome news for the housing market at large. The spike in the cost of home financing over the last 4 months has led to a 4-month slide in new home sales and a 3-month slide in existing home sales. The current slowdown in the market, while increasing the number of homes for sale, may actually exacerbate the existing overall housing shortage in the long term, if the news causes builders to pull back. New construction data shows that completed homes, ready for sale, dropped 5.1% from the prior month, and were 8.6% below April 2021. Homebuilder sentiment, as measured this month by the National Association of Home Builders’ Housing Market Index, is down 10.4% from May of last year and at its lowest level since the early days of the pandemic. Dark and stormy is the current mood, but a period of steadier rates below recent highs will give buyers, sellers, and builders alike the time to adjust to the new financial environment.”
